By Bell, John
Mortgage Banking , Vol. 69, No. 1
The nation's gateway cities are defined by urban experts as those deriving added economic muscle from their strong links to the expanding global network of commerce and finance. These cities serve as the key entry points for both pools of foreign workers and global imports. Their diverse economies are engines of job creation, serving as magnets in attracting new immigrant populations. Some also function as major ports for the movement and transfer of goods. Experts on these markets single out three cities--one American--that rank as supergateways: New York, London and Tokyo. Much of what does or does not occur in world financial markets, say these sources, originates with initiatives from these three megacenters. In the United States, other major members of the gateway club include Washington, D.C.; Miami; Houston; Los Angeles; San Francisco; San Jose, California; Seattle; and Chicago. An additional new wave of secondary gateways is emerging, a trend discussed later in this article. As to the Big Three, Stephen Blank, seniorfellow-finance for the Urban Land Institute (ULI), Washington, D.C., comments, "These three are the financial capitals of the world. They're headquarters of the largest banks; the largest financial services, insurance and real estate firms. They share the commonality of their resources with other centers of financial trading on a worldwide basis."
Hugh Kelly is principal with Brooklyn, New York-based Hugh Kelly Real Estate Economics, national real estate consulting firm, and political professor of real estate at New York University in New York. He notes, "We live in an increasingly borderless world as economic integration continues. We're seeing gateway cities increase trading with their counterparts elsewhere."
Herman Bulls is chief executive officer of Public Institutions, a division of Chicago-based Jones Lang LaSalle, and chief executive officer of Bulls Capital Partners LLC, Vienna, Virginia, a multifamily lender. He says, "In terms of capital flow, the deal will be made in a gateway city, and capital will flow out to secondary or tertiary markets."
Population growth is key
Robert Bach, senior vice president and chief economist of Chicago-based Grubb & Ellis Co., emphasizes the importance of immigrant populations in driving economic growth.
"Population growth is an important indication of economic vitality. It produces jobs in gateway cities. Immigrants will typically settle in the core cities, but as they earn more they move to the suburbs, benefiting the whole metropolitan area."
Ross Moore, senior vice president and director of marketing and economic research for Boston-based Colliers International, says it's an error to equate only cities with ports as gateway cities.
"Gateway cities are those plugged into the global economy," he explains. "It's a mistake to associate them strictly with ports. San Jose [California] is a good example of a gateway city without a port.
"Gateways in common are very connected to what's going on globally. It's more than just trade. It's also capital and people. Since the U.S. has the weakest major economy in the world [currently], gateways are weathering economic reversals in better shape than others," Moore concludes.
David Feehan is president of the Washington, D.C.-based International Downtown Association (IDA). He provides some insight into the role of downtowns in gateway city growth and expansion.
"Gateway cities are expanding beyond metro boundaries to become gateway regions, where you see measurements of economic activity, venture-capital financing and new companies being formed. Dollars and people don't respect the boundaries of cities. Downtowns are one reason why these regions are such pronounced successes versus other metro areas which are flat [in terms of economic growth]," he says.
Feehan adds that downtowns are magnets for immigrants who come for job opportunities. …